Imagine losing nearly half a million dollars in a share dispute among some of Canberra's most prominent legal figures. That's exactly what happened to Joanna Scott, who has now been awarded $500,000 in compensation by a Federal Court judge. But here's where it gets controversial: the case revolves around a bitter fallout between former colleagues, a plummeting share value, and a legal battle that raises questions about fairness and responsibility in business dealings.
The drama unfolded within two companies, Aulich Civil Law (ACL) and Aulich Property Trading (APT), both founded by ex-Canberra lawyer Ben Aulich. Initially, each company issued 100 shares, with Joanna Scott—wife of barrister Jack Pappas and Aulich's colleague—holding a 25% stake. Aulich, along with lawyers Peter Woodhouse and Erin Taylor, also held 25% each. But this seemingly straightforward arrangement took a chaotic turn when, in 2020, the companies decided to dilute their shares from 100 to nearly 100,000, citing financial concerns amid the pandemic.
By this time, relations between Aulich and Pappas had already soured, dating back to 2018. Scott, wanting to sell her shares, found herself in a precarious position. The court found that this share dilution caused the value of her holdings in ACL to crash from $500,000 to a mere $494. And this is the part most people miss: the judge ruled that this drastic devaluation was a direct result of what he called 'oppressive conduct' by the defendants.
Justice Angus Stewart highlighted a series of heated exchanges, including Pappas's offer to lend the firm money on the condition that Scott's shares be fairly redeemed. Aulich dismissed this as 'stark raving mad,' further escalating tensions. Solicitor Erin Taylor even remarked, 'the gloves are off,' underscoring the acrimony. Stewart noted that Pappas's proposal—to buy Scott's shares at their original value—was 'entirely reasonable and conventional.'
A key point of contention was the eventual demise of both companies. The defense argued that this rendered Scott's claim moot, but Stewart disagreed. Here’s the bold takeaway: he ruled that Scott bore 'no responsibility' for the companies' downfall and that her inability to sell her shares at their original value was solely due to the defendants' actions.
The judge awarded Scott $500,000 for her ACL shares, plus additional compensation for her stake in APT. The case, however, isn't fully closed, as costs are yet to be finalized. But here’s the question that lingers: In high-stakes business disputes, where do we draw the line between protecting shareholders and allowing companies to make tough financial decisions? Share your thoughts below—do you think the ruling was fair, or does it set a problematic precedent?
